NASSAU, BAHAMAS — Minister of Economic Affairs Halkitis yesterday dismissed claims made by the Free National Movement (FNM) that the government had to do a repurchase agreement to raise funds.
This is in response to the government last month entering into a repurchase agreement (repo) with Goldman Sachs International (GSI).
At the time, Halkitis said the deal was “basically a two-year loan”.
Yesterday, the minister said the government is “absolutely” having no difficulty in generating funds and the statement made by the FNM is a narrative being pushed by the opposition.
“The repo transactions are not some convoluted, exotic structures, but they play a significant part in global financial markets every day,” Halkitis said.
“The repo transactions allowed the government to leverage the assets of the sinking fund while continuing to receive income on those assets and grow the sinking funds.”
He said no payments will be due from the sinking fund during the term of the repo, and there are no questions about assets not being available for debt repayment.
Halkitis also said compared to the previous administration, where the interest rate was paid at 8.95 percent, the repo transaction was paid at 2.4 percent.
“We are managing our profile to reduce the cost of debt,” he said.
“We’ll be using a number of different instruments to do that — 8.95 percent versus 2.4 percent.”
There is nothing sinister going on here — totally transparent.
– Economic Affairs Minister Michael Halkitis
In response to the FNM’s criticism that the government has made contradictory statements, Halkitis said bond issues require months of planning.
“There is absolutely nothing contradictory about that. Going to market is a very involved process, so we are making preparations so that when we do eventually go to market, we will be ready and we will be prepared,” he said.
“There is nothing sinister going on here — totally transparent.
“We published the transaction and it’s all a part of our strategy.”
Halkitis said when the House of Assembly resumes on Wednesday, the Davis administration will further explain the government’s policies and financial performance.
Written by Eyewitness News Intern Kareem Minnis
